Select Committee on Education and Skills Minutes of Evidence

Annex 3


  We understand that that a review process has been proposed to consider charging interest at the government rate of borrowing as opposed to the present inflation uprating on student loans.

  As you know some Muslim students have objected even to the inflation uprating as they consider it to constitute interest (riba). Many have not taken out student loans for this reason.

  However, if the proposal to peg the rate charged to more market oriented rates is approved then many more Muslim students will stop to avail themselves of student loan finance as it would be difficult not to

classify such charges as not constituting riba.

  If, as we expect, the number of Muslim students not comfortable with taking up student loans under such revised terms becomes very large, then the impact on the willingness of many students to continue their education could be grave.

  It is, therefore, our view that any review process should consider the adverse impact of tying loan charges to market rates rather than inflation uprating on the Muslim student population.

  We strongly advocate that the present arrangement be maintained.

M Iqbal Asaria

Chair, Business & Economics Committee,

Muslim Council of Britain.

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